2. How does the recognition of revenue on account (accounts receivable) affect the income statement compared to its effect on the statement of cash flows?

3. How does net income affect the stockholders’ claims on the business’s assets?

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4. How do temporary accounts differ from permanent accounts? Name three temporary accounts. Is retained earnings a temporary or a permanent account?

5. Assuming that withdrawals during the accounting period were $1,600, prepare the entry in journal form to close the R. Shah, Withdrawals account to the R. Shah, Capital account. The accounting period ends December 31.